1. Budgeting 101 TRiO Student Support Services Arizona State University

2. Why should I have a budget?Let’s talk about what is and isn’t a budget, and how it can benefit you. Budgeting 101 A budget can be your best friend. Creating a budget.We’ll go over how you can create a budget that works for you. Using a budget.Now that you’re all set, how to keep the budget going. Making changes to your budget.Expect the unexpected; know how to adjust. Step 1 Step 2 Step 3 Step 4

3. Determining the benefit of having a budget. Step 1:

4. A budget is: A plan that defines how money is allocated for specific purposes, such as rent, groceries, or other expenses in life. What is a budget? A budget is not: Simply spending less.

6. Have you ever asked yourself, “Where did my money go?” With a budget, you will be able to see where every dollar goes.

7. Having a “visual” representation of where your money is going puts you in control of how your money gets spent. Why should I have a budget? Six reasons why a budget is a good thing:

11. The cost of utilities, rent and gas rarely stay the same.

12. A budget will allow you to plug in when costs change, and proactively adjust, thus eliminating any “surprises” in your cash flow.Why should I have a budget? Six reasons why a budget is a good thing:

14. Debt can be a burden, and should be kept at a minimum.

15. Having control of your money keeps you in the “now”. You’ll know exactly what you have coming in and going out.

16. Knowing exactly what you have can discourage you from overspending and using things like credit cards, where they could become a deficit in your budget for years to come.Why should I have a budget? Six reasons why a budget is a good thing:

18. After you’ve paid for necessities, a budget will show you exactly what you have left.

19. Conversely, if you decide you want to spend money on things like entertainment and dining out, you’ll see that you might not have any left for necessities such as rent and food.

20. Ultimately, the decision is yours, but a budget does make it easier for you to see exactly how your spending impacts your ability to pay your bills.Why should I have a budget? Six reasons why a budget is a good thing:

22. Controlling your spending now will allow you to develop healthy financial habits that will stay with you far beyond your college years.

23. After graduation, you may be thinking of purchasing a house, a car or traveling. Good spending habits will pave the way for a more stable financial future.Why should I have a budget? Six reasons why a budget is a good thing:

24. Creating a budget. Step 2:

25. Budget example: To create a budget, list out all of your regular expenses for a typical month. Remember, be honest with yourself. Here’s an example of a simple budget.

26. Budget example: Expenses (money going out.) Notice that the top four are priority expenses (meaning things you cannot live without and are at a rate/price you have little control over.)

27. Budget example: Expenses (cont) Notice that the bottom two are flexible expenses (meaning things you may or may not need and you can choose how much you should spend on them.)

28. Budget example: Income (money coming in.) Now that we have our expenses listed, (money going out) let’s focus on income. (money coming in)

29. Using a budget. Step 3:

30. Using a budget: Rule 1 Commit to only spending what you listed on your budget. Remember, a budget is only as effective as how well it is used.

31. Using a budget: Rule 2 Be honest with yourself when reporting spending and expenses on your budget.

33. Scenario 1: Using left-over funds Let’s say your books and supplies for Aug weren’t as much as you anticipated, and you only spent $150.00. The remaining $50.00 can be added to another month for supplies to pay for additional books, project materials, printing at the computer lab, making copies, etc. AFTER: 150 for supplies - $50 remaining (split into $30 & $20) 20.00 + 30.00 (from remaining funds) for Sept = 50.00 20.00 + 20.00 (from remaining funds) for Oct = 40.00 BEFORE: $200.00 for books & supplies 20.00 for Sept 20.00 for Oct.

34. Scenario 2: Overspending Let’s say let’s say you overspent in your “entertainment” budget for the month of Aug by $15.00. (Meaning you spent a total of $35.00 - $15 more than you budgeted for.) Using your budget, you can now reduce your entertainment budget for Sept and Oct so that your budget will remain balanced. AFTER: $20.00 for Sept (minus 5.00) = $15.00 $20.00 for Oct (minus 10.00) = $10.00 ($15.00 overspent split by 5 & 10) BEFORE: $20.00 a month for entertainment.

35. Scenario 3: Unexpected expenses Let’s say let’s say you had your air conditioner turned down lower than usual, and your August electricity bill is higher than you budgeted for. (You budgeted $50.00 but it is now $65.00) . You can re-arrange your budget so that you can take the an extra $15.00 to cover it from other parts of the budget. In this scenario, $5 from food and $10 from entertainment. This way, you keep your budget balanced while making a minimal sacrifice. You also might want to commit to keeping your thermostat a little higher the following month to avoid this from happening in the future. AFTER: $65 for utilities (AC) for Aug. $95 for food ($100 minus $5) $10 for entertainment ($20 minus $10) BEFORE: $50 for utilities (AC) for Aug.

36. Budgeting 101. Wrapping it all up:

38. Avoid getting into debt.

39. Be prepared for changes.Remember – it’s YOUR money. A budget will help you get the best use out of it. To budget is to be in control.